PEZA, export enterprises appeal for suspension of the implementation of BIR RR No. 9-2021
01 July 2021 (Thursday)
Pasay City – The Philippine Economic Zone Authority (PEZA) and its registered export enterprises have appealed for a status quo on the implementation of BIR Revenue Regulation (RR) No. 9-2021, which has taken effect on 27 June 2021, 15th day of its publication.
BIR RR No. 9-2021 identified transactions that shall now be subject to the 12% Value Added Tax (VAT) which are previously taxed at zero percent, particularly those considered as export sales under Executive Order No. 226 or the Omnibus Investments Code of 1987 and other special laws.
In a letter to the Department of Finance (DOF) Secretary Carlo Dominguez III, PEZA Director General Charito ‘Ching’ Plaza, in behalf of its registered business enterprises (RBEs), has sought for clarification regarding the issued RR in relation to the express provision of the recently passed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Law (RA No. 11534).
“We would like to seek confirmation that local purchases of PEZA export enterprises, whether from an export-oriented or domestic enterprise, shall be taxed at zero percent VAT subject to the condition required under the provisions of Section 295 of RA 11534 and Section 5 of its IRR,” said the PEZA Chief.
The Director General noted, “The inclusion of the RR in the final draft of CREATE’s implementing rules and regulations and the amendment of the definition of ‘export sales’ in the law has created the impression and interpretation that sale to PEZA RBEs shall be automatically subject to 12% VAT.”
Deferment of implementation
Likewise, PEZA has requested for the deferment of the implementation of RR No. 9-2021 or status quo to give its export enterprises the opportunity and sufficient time to study the regulations before its implementation.
Furthermore, the Director General noted that the deferment will “provide the IPAs and concerned government agencies the opportunity to institute mechanisms and procedures to effectively implement the new regulations particularly in ensuring that the condition set forth in the availment of the VAT zero-rating incentive shall be fully complied.”
Effect to PEZA enterprises
PEZA also expressed concern that the implementation of the RR will add to the burden of the RBEs and will in turn affect their overall competitiveness in the world market.
Likewise, Plaza said “The additional VAT is an unnecessary expense that will make the Philippines unattractive to foreign investors.”
“Amidst the pandemic, the PEZA RBEs are the ones who helped keep the PH economy afloat. What we must do is to ensure that existing enterprises should stay and expand their operations instead of driving them away by removing their incentives and imposing another form of taxes,” noted Plaza.
PEZA has requested for a meeting with the DOF Secretary and BIR Commissioner Caesar Dulay to discuss the request and the impact of the RR to its registered enterprises.